Commerce Commercial Partners v. Milliken & Company

Filing 111

MEMORANDUM DECISION AND ORDER denying 81 Motion in Limine No. 6 To Exclude Plaintiff's Claim for Attorneys' Fees; granting 71 Motion in Limine re Attys Fees and Costs. Signed by Judge David Nuffer on 6/4/24 (alt)

THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH
COMMERCE COMMERCIAL PARTNERS,
LLC, a Utah limited liability company,
Plaintiff,
v.
MILLIKEN & COMPANY, a Delaware
corporation,
Defendant.

MEMORANDUM DECISION AND
ORDER DENYING MILLIKEN’S
MOTION IN LIMINE NO. 6 TO
EXCLUDE PLAINTIFF’S CLAIM FOR
ATTORNEYS’ FEES and
GRANTING [71] MOTION IN LIMINE
RE: PLAINTIFF’S ATTORNEYS’ FEES
AND COSTS
Case No. 4:22-cv-00020-DN-PK
District Judge David Nuffer
Magistrate Judge Paul Kohler

This lawsuit arises from a commercial tenant’s alleged breach of a Lease Agreement for
an industrial building. 1 Defendant Milliken & Company (“Milliken”), the former tenant, moved
to exclude evidence of building owner Commerce Commercial Partners’ (“CCP”) claim for
attorneys’ fees “because [it] is irrelevant to any issues that remain.” 2 CCP responded. 3 This order
determines that attorney’s fees evidence appears relevant and will be received in the second
phase of a two-phase trial. The first phase starting Tuesday June 25, 2024, will determine CCP’s
claims for damages and facts establishing entitlement to recovery attorneys’ fees under the Lease
Agreement. The second phase, following immediately after the first phase, will determine

The Lease Agreement is attached to several documents in the case file, and is attached to the Complaint as Exhibit
1, docket no. 2-1, filed March 29, 2022.

1

Motion In Limine No. 6 to Exclude Plaintiff’s Claim for Attorneys’ Fees (“81 Motion”) at 1, docket no 81, filed
May 15, 2024.

2

3
Opposition To Defendant’s Motion in Limine No. 6 To Exclude Plaintiff’s Claim for Attorneys’ Fees (108
Opposition), docket no. 108, filed May 29, 2024.

applicability of any other theories for recovery of attorneys’ fees (including the applicability of
Utah Code Ann. § 78B-5-82); amounts of fees to award; and to whom any award is made. 4
Contents
I.
II.

III.

IV.
V.
VI.
VII.

FACTUAL BACKGROUND ............................................................................................. 2
LEGAL SETTING .............................................................................................................. 3
A.
Complaint Allegations Regarding Attorneys’ Fees ................................................ 3
B.
Milliken’s Answer Does Not State a Basis for Attorneys’ Fees ............................. 3
C.
Damage Disclosures................................................................................................ 4
D.
Partial Summary Judgment Ruling Regarding Attorneys’ Fees ............................. 4
E.
Construction of Relevant Lease Agreement Provisions Regarding Attorneys’ Fees
................................................................................................................................. 5
F.
The Parties’ Analysis Has Confused Issues ............................................................ 9
1.
Confusion with “Additional Rent” Provisions............................................ 9
2.
Confused Interpretation of Section 29. ..................................................... 11
3.
Clarification of Lease Agreement Concepts and Requirements. .............. 13
DISCUSSION OF SPECIFIC ISSUES IN MILLIKEN’S MIL 6 .................................... 16
A.
Trial Is Required to Evaluate a Claim Under Utah Code Ann. § 78B-5-826 ....... 16
B.
Milliken’s argument that CCP did not meet the requirement of Sections 16 and 29
of the Lease Agreement is based on misinterpretation of the Lease Agreement .. 17
C.
It is not possible to determine CCP’s entitlement to fees for its rent abatement
claim ...................................................................................................................... 18
THE USUAL PRACTICE IS TO DETERMINE FEES POST TRIAL ........................... 18
THE ALTERNATIVE BASES FOR ATTORNEYS’ FEES CLAIMS REQUIRE A
PHASED TRIAL .............................................................................................................. 18
ISSUES SUGGESTED BY DAMAGES DISCLOSURE ................................................ 20
ORDER ............................................................................................................................. 21
I.

FACTUAL BACKGROUND

CCP is a landlord for commercial properties. CCP constructed an industrial building
(“Leased Premises”) in Ft. Pierce Industrial Park in St. George, Utah, in or around 2004.
Milliken was the commercial tenant of the Leased Premises from May 9, 2006, until May 31,

This order also resolves a related motion filed by CCP (Motion in Limine Re: Plaintiff’s Attorneys’ Fees and Costs
(“71 Motion”), docket no. 71, filed May 15, 2024) and opposed by Milliken (Response to Plaintiff’s Motion in
Limine Re: Attorneys’ Fees and Costs, docket no. 100, filed May 26, 2024). The 71 Motion sought resolution of
attorneys’ fees issue in post-trial proceedings.
4

2

2021. Even before the lease ended, the parties had disputes about the condition and return of the
premises which eventually ripened into this case.
II.

LEGAL SETTING

A. Complaint Allegations Regarding Attorneys’ Fees
CCP’s Complaint 5 specifically seeks attorneys’ fees under contract in its Prayer for
Relief:
. . . an award to CCP of all attorneys’ fees and other costs of bringing this action as
authorized by contract . . . . 6
The Complaint also seeks attorneys’ fees in its First Cause of Action for breach of the
Lease Agreement —
Milliken should be compelled to reimburse CCP for all damages it has suffered
due to Milliken’s breaches of contract in an amount to be established at trial,
including consequential and incidental damages, attorneys’ fees incurred before
and after suit, 10% late fee as provided in the Lease, and interest on all damages
at the contractual or post-judgment rate. 7
— and in its Second Cause of Action for breach of the covenant of good faith and fair dealing:
Milliken has violated the implied covenant of good faith and fair dealing and has
damaged CCP in an amount to be proven at trial, including consequential and
incidental damages, plus costs, attorneys’ fees, 10% late fee as provided in the
Lease, and interest at the contractual or post-judgment rate. 8
B. Milliken’s Answer Does Not State a Basis for Attorneys’ Fees
By contrast, Milliken’s Answer does not state a basis for a claim of attorneys’ fees but
does ask for an “award [of] costs of litigation including reasonable attorneys’ fees” in its prayer
for relief. Milliken did not file a counterclaim.

5

Complaint, docket no. 2, filed March 29, 2022.

6

Id. ¶ V. at 13.

7

Id. ¶ 67 at 11.

8

Id. ¶ 71 at 12.

3

C. Damage Disclosures
Damage disclosures CCP made under Fed. R. Civ. P. 26(a) and DUCivR 26-1 have
included attorneys’ fees calculations. 9 No damages disclosures have been filed by Milliken. 10
D. Partial Summary Judgment Ruling Regarding Attorneys’ Fees
Liability for attorneys’ fees on some of CCP’s attorneys’ fees claims was subject of an
earlier ruling on Milliken’s motion for partial summary judgment. The 69 Summary Judgment
Order) 11 denied CCP attorneys’ fees and the cost of collection that CCP incurred pursuing its
claims for roof repairs and mechanical units installed by CCP. These denials were based on
CCP’s failure to provide a reasonable estimate for the damages it sustained to its damaged roof 12
and on the mechanical units claim because CCP pursued the replacement value of the mechanical
units that CCP installed, a remedy that it was not entitled to receive under the Lease
Agreement. 13
The discussion in the summary judgment order also considered, to a limited extent, the
attorneys’ fees provisions in the Lease. Though the parties did not raise Section 26 of the Lease
Agreement in their briefing on Milliken’s motion for partial summary judgment, they responded
to an order and filed memoranda “discussing the effect of Section 26 of the Lease on the CCP
claim for attorneys’ fees.” 14 The 69 Summary Judgment Order addressed “whether Section 26 is

Exhibits B, C, and D to 81 Motion. See also documents attached as docket no. 79-1 and docket no. 79-2 to
Defendant’s Motion in Limine No. 5 to Exclude Plaintiff’s Alleged Waste Damages, docket no. 79, filed May 15,
2024. While the parties refer to these disclosures as “filed” on certain dates, they do not appear on the docket except
as exhibits to motions.
9

10

Under DUCivR 26-1(a)(1) these documents are filed only when exhibits to a motion.

11
Memorandum Decision and Order Granting in Part and Denying in Part Defendant’s Motion for Partial Summary
Judgment, docket no. 69, filed February 23, 2024.
12

Id. at 24.

13

Id. at 25.

14

Docket text order, docket no. 66, filed January 17, 2024.

4

a first-party provision that can be invoked by the Landlord against the Tenant or a third-party
provision that can only be used to require payment of fees arising from claims by or against third
parties.” 15 The 69 Summary Judgment Order stated that
Section 26’s [language] indicates that the parties intended the provision to only
apply to third-party claims. Additionally, the indemnity provision does not clearly
and unequivocally allow CCP to [independently] recover attorneys’ fees from its
tenant, which is required under Utah law. For these reasons, Section 26 of the
Lease Agreement does not permit CCP to recover attorney’s fees from Milliken. 16
The 69 Summary Judgment Order found that Section 26 of the Lease Agreement would not
support CCP’s direct claims for attorneys’ fees against Milliken.
The 69 Summary Judgment Order 17 interpreted the Lease Agreement as the parties did. 18
This order takes a new look at the construction of the Lease Agreement provisions on attorneys’
fees.
E. Construction of Relevant Lease Agreement Provisions Regarding Attorneys’ Fees
The relevant Lease Agreement provision regarding attorneys’ fees is found in Section 29,
entitled “Default.” That attorneys’ fees provision reads:
In the event Landlord places the enforcement of all or any part of this Lease in the
hands of an attorney on account of Tenant's default, Tenant agrees to pay
Landlord's cost of collection, including reasonable attorney's fees, whether suit is
actually filed or not. 19
This provision, contrary to the assumptions of the parties, is an independent part of Section 29.
Section 29 describes remedies available to the parties.
15

69 Summary Judgment Order at 25.

16

Id.

17

Id. at 23-24.

18
Plaintiff’s Opposition to Defendant’s Motion for Partial Summary Judgment at 36-37, docket no. 51, filed August
25, 2023; 108 at 9.

Lease Agreement at 8. Other Lease Agreement provisions not relevant in this dispute give rights to recovery of
attorneys’ fees in specific circumstances, such as Section 24 Covenant Against Liens (page 6); Section 27
Landlord’s Indemnity (page 6); and Section 28 Environmental Matters (page 7).
19

5

The attorneys’ fees provision is part of a two-paragraph sentence in the fourth paragraph of
Section 29. To understand its position and independence, Section 29 will be examined in its
entirety.
The first four paragraphs of Section 29 provide remedies for the Landlord. The last
paragraph of Section 29 provides Tenant remedies.

6

The first paragraph of Section 29 has two sentences, with different purposes.

The first sentence gives the Landlord the possibility of invoking a late fee on any failure
to pay “rental or other sum due.” It requires a notice, and the Tenant’s failure to cure with ten
days. This late fee is a remedy for the Landlord.
The second sentence gives the Landlord another right, 60 days after notice of the
Tenant’s failure to comply with any term, provision, condition or covenant of the lease. This
trigger is broader than the late fee financial trigger. But the 60-day time period would run from
the date of the same notice of default because a financial trigger is a failure to comply with a
lease provision.
If notice of breach does not provoke a cure by the Tenant within 60 days, or if the Tenant
files bankruptcy, the Landlord gains the right to take two actions in the following paragraphs (a)
and (b). These are additional Landlord remedies beyond the late fee. Paragraphs (a) and (b) give
the Landlord the right to (a) terminate the lease or (b) retake possession without terminating the
lease. There is no conjunction between these two remedy paragraphs.
The fourth full paragraph has two sentences, with different purposes.

The first sentence clarifies that no remedy taken by the Landlord excludes any other remedy,
whether in the lease or under the law. It makes all remedies in the Lease Agreement (in this
7

Section 29 and in other Sections) cumulative to each other and to the standard remedies provided
by law.
The second sentence of the fourth paragraph is the attorneys’ fee paragraph cited above.
The second sentence attorneys’ fees provision is, by its position; the text of the preceding
paragraph with the termination and re-entry remedies; and the preceding sentence about
cumulation of remedies, independent of the other parts of Section 29. This makes practical sense.
In the event of any breach in a lease, a landlord will contact counsel. The entitlement to recover
fees is conditioned on placing the enforcement of the Lease Agreement in the hands of an
attorney on account of Tenant’s default. There is no notice required to start the attorneys’ fee
obligation; the only requirements to recovery of attorneys’ fees are (a) Tenant’s default and (b)
Landlord turning the matter to counsel. There is no requirement of time elapsing in this sentence.
And there is no requirement of notice to start attorneys’ fee accrual. Of course, notice of breach
is required for other reasons and remedies.
As noted above, the last paragraph in Section 29 provides for Tenant remedies against the
Landlord. 20
Section 29 provides remedies for both parties. The Lease Agreement defines obligations
throughout, and other Sections describe other remedies, but Section 29 cumulates them all and
provides for Landlord recovery of attorneys’ fees.

The paragraph of Tenant remedies is more favorable as to time than the first paragraph of Section 29 for the
Landlord. The Tenant need only give the Landlord 30 days after notice of the Landlord’s failure to comply with any
term, provision, condition or covenant of the lease. The second sentence gives the Tenant the right, after waiting 10
days after another notice that remains ignored, to cure at the Landlord’s expense. That paragraph also gives the
Tenant the right to make emergency repairs at the Landlord’s expense if the Landlord fails to act within 24 hours
after notice. However, this paragraph has no right for the Tenant to recover attorneys’ fees.
20

8

F. The Parties’ Analysis Has Confused Issues
The parties have erred in their understanding of the Lease Agreement provision on
attorneys’ fees. Milliken’s 81 Motion summarizes the first part of this erroneous analysis:
Therefore, the first step toward any effort to recover attorneys’ fees under the
Lease requires CCP to demonstrate: (1) a default by Milliken in a repair
obligation; (2) notice to Milliken of the default; (3) a failure by Milliken to cure
that default for more than thirty (30) days; and then (4) performance by CCP of
the repair obligation it claims Milliken failed to meet. 21
CCP’s 108 Opposition argues within this framework, claiming compliance. 22
The first two steps are somewhat accurate. Accrual of attorneys’ fees starts with a default.
And a notice of default is eventually required though not before hiring counsel. But the
remaining two steps (failure to cure within 30 days and performance of repairs by CCP) are not
required for an attorneys’ fee obligation to accrue.
1. Confusion with “Additional Rent” Provisions
The parties draw the last two steps (expiration of 30 days and Landlord repairs) by
interpolating the attorneys’ fee sentence in Section 29 with some Section 16 provisions
pertaining to another remedy, “additional rent.”
Section 16 Analysis. Section 16 establishes the Tenant’s obligations for repairs and
maintenance. This Section is relevant to Milliken’s obligations and CCP’s allegations of breach,
but not otherwise relevant on the issue of attorneys’ fees.
The first four sentences of Section 16 establish Tenant’s repair and maintenance
obligations.
SECTION 16. Tenant Repairs and Maintenance. At all times during the term of this
Lease and any extension thereof, but subject to the obligations of Landlord contained
herein, Tenant shall maintain the fixtures, equipment and appurtenances thereon, and at
21

81 Motion, at 13. CCP’s 108 Opposition argues within this framework, claiming compliance. 108 Opposition at 9.

22

108 Opposition at 9.

9

its sole cost and expense, make all repairs of any nature thereto as and when needed to
preserve the Premises in good condition. Any modifications or alterations undertaken by
Tenant shall be completed in a workmanlike and lien-free manner in accordance with all
applicable codes and regulations. Subject to the obligations of Landlord contained herein,
all damage or injury to the Premises and to its fixtures and appurtenances shall be
repaired promptly by Tenant, at its sole cost and expense. All aforesaid repairs,
restorations and replacements shall leave the Premises in a condition substantially
equivalent to the status of the Premises on the Commencement Date. 23
Breach of Milliken’s repair and maintenance obligations gives rise to many of CCP’s claims.
The last sentence of Section 16 deals with a different topic. It gives the Landlord another
remedy not found in Section 29.
If Tenant should default in performance of Tenant's obligations under this
Paragraph, and such default continues for more than thirty (30) days after receipt
by Tenant or written notice of such default from Landlord, which notice shall
specify in detail the nature of the default, Landlord may perform Tenant's
obligations under this section and any amount so expended shall be deemed
additional rent due Landlord under this Lease.
After a notice of breach, if 30 days elapses without cure, the “Landlord may perform Tenant's
obligations under this section.” This is an optional remedy, dependent on notice, time elapsing,
repairs by Landlord, and expenditure of funds. Repair by the landlord is not required. The
Landlord’s election to repair and recover costs and create an additional rent obligation is a
powerful remedy but not mandatory and not prerequisite to a status of default or to liability for or
a right to recover of attorneys’ fees. A status of default depends on the Tenant’s actions or
failures. The right to recovery of attorneys’ fees depends on placement of the matters in the
hands of the attorney.
This sentence makes clear that default occurs by the Tenant’s acts or failures to act
because it states that the notice is of an existing default. The Lease Agreement never says that
default only exists upon notice or upon notice. Default is a fact of performance or neglect by

23

Lease Agreement at 5.

10

Tenant – or under some Sections, by Landlord. Also, this sentence, combined with Section 21
and others, shows that notice to the Tenant is required.
The “additional rent” provision is powerful but never essential to a Landlord’s claim of
default or for attorneys’ fees. The Lease Agreement declares certain sums advanced by the
Landlord to be additional rent on certain conditions. This starts with reliance on Section 6(d):
SECTION 6(d) [Rent] As hereinafter used, the term “rent” shall be deemed to include
Base Rent and any other sums owing to Landlord as additional rent, if any, payable to
Landlord hereunder.
Section 16 provides that costs advanced by the Landlord in fulfilling Tenant’s breached
obligations may become additional rent after 30 days’ notice to Tenant of a failure to repair and
Landlord repairs. (Another provision providing for “additional rent” is Section 8 Taxes. 24 That
Section is not relevant on this record. 25)
Rent obligations open the door to additional remedies under the law and under the Lease
Agreement which are not available for other lease breaches. For example, the (a) and (b)
paragraphs of Section 29 become available.
The preconditions listed in the third and fourth steps of the Milliken analysis adopted by
CCP apply to creating an “additional rent” obligation for the repair expenses advanced by CCP
but they have nothing to do with attorneys’ fees.
2. Confused Interpretation of Section 29.
The parties’ logic goes further awry in imposing irrelevant portions of Section 29 onto
the Landlord’s right to recover attorneys’ fees. As shown above, there are independent
paragraphs and rights in Section 29. But Milliken states:

24

Lease Agreement at 2-3.

25

Id.

11

Section 29 of the Lease requires payment of “rent[] or other sum due” to be owed
and not paid by Milliken. If that occurs, Section 29 requires CCP to make an
additional written demand that puts Milliken on notice of the amount due and
gives a minimum of ten (10) days for Milliken to pay the amount due. CCP can
only pursue the “cost of collection” of the amount due after that additional notice
and ten-day period has expired, and those costs of collection can include
“reasonable attorney’s fees.” 26
This argument erroneously concludes that the Landlord is required to wait ten days after notice
to have any remedies listed in Section 29. As discussed above in Part II. E, this is wrong. Breach
occurs when the Tenant acts or fails to act in violation of lease obligations. Attorneys’ fee
liability accrues when the matter is referred to counsel.
Milliken justified its conclusion that ten days was required to elapse after notice by
heavily editing the text of Section 29 to make the ten-day period a predicate to all remedies. This
is how Section 29 was quoted in Milliken’s 81 Motion, in the statement of facts and in the
argument. 27
SECTION 29. Default: In the event any payment of rental or other sum due
hereunder is not paid as and when due and Tenant fails to cure such default within
ten (10) days after written demand from Landlord . . . then Landlord shall have
the option to do any one or more of the following:
(b) Without terminating this Lease, terminate Tenant’s right of possession,
whereupon rental shall continue to accrue and be owed by Tenant hereunder . . .
In the event Landlord places the enforcement of all or any part of this Lease in the
hands of an attorney on account of Tenant’s default, Tenant agrees to pay
Landlord’s cost of collection, including reasonable attorney’s fees, whether suit is
actual filed or not.
Comparison of Milliken’s contracted quotation with the construction of Section 29 in this order 28
reveals several misimpressions by:
•

collapsing the ten-day period after notice of default required for late fee imposition
into parts of the Section which do not require ten days to elapse after notice;

26

81 Motion at 14.

27

Id. at 3-4 and 13.

28

Supra, Part II. E. at 5-8.

12

•
•
•

failing to show the structure of the two paragraphs (a) and (b) introduced by the last
sentence of the first paragraph;
omitting the sentence regarding the cumulation of remedies; and
creating a non-existent ‘if-then’ relationship between all the quoted material and the
independent attorneys’ fee provision.

CCP has apparently used this same analysis, not arguing against it, but claiming compliance.
“CCP also issued a 10-day notice to Milliken for the balance of the cost for repairs to the
mezzanine on May 28, 2021.” 29 The ten-day period after notice in Section 29 applies only to the
late fee.
These same misconstructions were the foundation of the summary judgment briefing. 30
3. Clarification of Lease Agreement Concepts and Requirements.
As the parties prepare for trial, it will be important for their evidence and argument to fit
within the proper construction of the Lease Agreement. This section states some implications of
proper construction of the Lease Agreement. These concepts and requirements relate to the
attorneys’ fees claims raised on this motion and to several other issues in the upcoming trial.
Default, Notice, and Waiting Periods. Default occurs by a party’s action or inaction in
violation of Lease obligations. Any breach of the Lease Agreement by any party is a default.
Some remedies, including the accrual of a right to recover attorneys’ fees are not dependent on
notice or on any lapse of time after notice. Notice of breach is required for other remedies. Some
remedies require a waiting period after notice and the Tenant’s failure to cure. These remedies
include the Landlord’s ability to make repairs and have them become additional rent 30 days
after notice of failure to repair or maintain (Section 16); the Landlord’s imposition of a late fee

29

108 Opposition at 8.

Defendant’s Motion for Partial Summary Judgment at 26-29, docket no. 46, filed July 21, 2023; Plaintiff’s
Opposition to Defendant’s Motion for Partial Summary Judgment at 36-37, docket no. 51, filed August 25, 2023;
108 at 9
30

13

10 days after notice of a financial default (Section 29); and the Landlord’s ability to invoke the
remedies to terminate the lease or re-enter without termination 60 days after notice of a financial
default (Section 29, paragraphs (a) and (b)).
Consecutive waiting periods are not set out in Sections 16 and 29. Those waiting periods
each serve a purpose and start running at a notice of breach. A notice of a breached repair
obligation and cure by the Landlord under Section 16 not only triggers the 30 day waiting period
before the Landlord’s right to repair and asses under Section 16, but also is a notice of a sum due
for purposes of the late fee under Section 29, and if not cured, also serves as notice that triggers
the 60-day waiting period after which the remedies in paragraphs (a) and (b) of Section 29 may
be exercised.
Additional rent. The parties have confused an obligation under the Lease Agreement
with additional rent. Obligations are throughout the Lease Agreement. Any breach of an
obligation by either party is a default. Only taxes 31 and repair costs may be qualified as
additional rent. The Lease Agreement does not require that a Landlord invoke the provisions for
“additional rent.” The ability to convert these sums paid into “additional rent” may give the
Landlord additional remedies under the Lease Agreement and under the law but the Landlord is
not required to create the additional rent obligation by taking the cure action outlined in the last
sentence of Section 16.
If Tenant should default in performance of Tenant's obligations under this
Paragraph, and such default continues for more than thirty (30) days after receipt
by Tenant or written notice of such default from Landlord, which notice shall
specify in detail the nature of the default, Landlord may perform Tenant's
obligations under this section and any amount so expended shall be deemed
additional rent due Landlord under this Lease. 32

31

Section 8 allows the Landlord to pay Tenant’s taxes to convert them to “additional rent.” Lease Agreement at 2-3.

32

Lease Agreement, at 5.

14

A 30-day period must elapse after notice of default in the Section 16 duties before the Landlord
may step in and make repairs. But Section 16 does not require the Landlord to perform Tenant's
obligations: “Landlord may perform Tenant's obligations . . . .” If the Landlord wants a benefit
by converting the repair expenditures into additional rent, the Landlord must give notice, wait 30
days, repair, and pay, but this is not required. 33
Late fees: If late fees are sought, CCP must show that a default in payment was not cured
ten days after notice as required by the first sentence of Section 29. The late fee may apply to any
sum due under the Lease Agreement. But waiting the ten days after notice of non-payment is not
required to ‘formalize’ a default or allow attorneys’ fee obligations to accrue. And the ten day
waiting period is not additional to the 60-day waiting period before the remedies in paragraphs
(a) and (b) may be exercised.
Remedies under paragraphs (a) and (b) of Section 29. While perhaps not relevant in
this case, so far as briefing reveals, the remedies under paragraphs (a) and (b) of Section 29 are
subordinate to the second sentence of Section 29. They are independent of the rest of Section 29.
Cumulation of remedies. For the Landlord, the remedies of the entire Lease Agreement
and those provided by law are cumulative, not exclusive.
Attorneys’ fees clause. The sentence on attorneys’ fees in Section 29 is independent of
the rest of the Lease Agreement and conditional only upon the requirements in that sentence. No
time periods after notices or Landlord payments are prerequisite. The merging of two subjects in
that paragraph is similar to the merging of two subjects in the first paragraph and again in the last
paragraph of Section 29.

This is similar to the optional process in Section 8 allowing the Landlord to pay Tenant’s taxes to convert them to
“additional rent.” (Lease Agreement at 2-3). Under that provision, no waiting period after notice to the Tenant is
required. But the Section states only that the ‘Landlord may pay’ the taxes.
33

15

III.

DISCUSSION OF SPECIFIC ISSUES IN MILLIKEN’S MIL 6

Milliken raises three issues in this motion in limine:
CCP is not entitled to a fee award, but Milliken is, under Utah Code Ann. § 78B-5826, because Milliken is the prevailing party in this case; 34
CCP did not meet the requirement of Sections 16 and 29 of the Lease Agreement to
claim attorneys’ fees; 35 and
CCP is not entitled to attorneys’ fees for its rent abatement claim. 36

•
•
•

A. Trial Is Required to Evaluate a Claim Under Utah Code Ann. § 78B-5-826
As noted above, the claim under Utah Code Ann. § 78B-5-826 37 has not been raised
before. And as is evident from the recitation of extensive facts in the 81 Motion, 38 there are
many facts to be determined as a predicate to deciding the new issues raised by the claim under
Utah Code Ann. § 78B-5-826.
The cases encourage a determination by the trial judge who has heard the case.
Which party is the prevailing party is an appropriate question for the trial court.
This question depends, to a large measure, on the context of each case, and,
therefore, it is appropriate to leave this determination to the sound discretion of
the trial court. . . . Appropriate considerations for the trial court would include,
but are not limited to, (1) contractual language, (2) the number of claims,
counterclaims, cross-claims, etc., brought by the parties, (3) the importance of the
claims relative to each other and their significance in the context of the lawsuit
considered as a whole, and (4) the dollar amounts attached to and awarded in
connection with the various claims. Based on these and other relevant factors, the
trial court is in a better position . . . to decide which party is the prevailing party. 39

34

81 Motion at 9.

35

Id. at 12.

36

Id. at 17.

37

38

A court may award costs and attorney fees to either party that prevails in a civil action based upon any
promissory note, written contract, or other writing executed after April 28, 1986, when the provisions of the
promissory note, written contract, or other writing allow at least one party to recover attorney fees.
81 Motion ¶¶ 1-28 at 2-8; 108 Opposition at 2-5.

39
R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 25, 40 P.3d 1119, 1126–27. See also Anderson & Karrenberg v. Jerry
Warnick, 2012 UT App 275, ¶12, 289 P.3d 600, 604 (2012).

16

The final factor, “the dollar amounts awarded,” requires that final rulings are in place before any
determination under Utah Code Ann. § 78B-5-826. And all the other listed factors – and others
not enumerated by the R.T. Nielson decision – will be clearer after trial. It is necessary to take “a
case-by-case evaluation by the trial court, and flexibility to handle circumstances where both, or
neither, parties may be considered to have prevailed.” 40
There are also unaddressed equitable issues.
[C]ourts may also inform their decisions with other equitable principles. For
example, in the spirit of leveling the playing field, courts should avoid using this
statute to expose one party to a disproportionate risk of paying attorney fees that
would result in a windfall to the other party. District courts should also apply
common sense principles in determining the prevailing party, if any. 41
The parties’ substantive claims and defenses are not now resolved and the full history of
the parties’ relationship is not in the record. No awards have been made. The issues arising under
Utah Code Ann. § 78B-5-826 are sequential, not preliminary, to determination of the core claims
in the case. They will be deferred to a second phase of the trial set June 25, 2024.
B. Milliken’s argument that CCP did not meet the requirement of Sections 16 and 29
of the Lease Agreement is based on misinterpretation of the Lease Agreement
As discussed in Parts II. E and F of this Order, Milliken – and CCP – misinterpret the
Lease Agreement provisions regarding attorneys’ fees and other related provisions. Therefore,
the argument that CCP did not meet the requirement of Sections 16 and 29 of the Lease
Agreement to claim attorneys’ fees is erroneously framed. And there are too many disputed facts
to enable a conclusive finding about required notices and the dates matters were referred to
counsel.

40

R.T. Nielson Co., 2002 UT ¶ 25.

41

Bilanzich v. Lonetti, 2007 UT 26, ¶ 20, 160 P.3d 1041, 1047 (2007).

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C. It is not possible to determine CCP’s entitlement to fees for its rent abatement claim
Similar to the unresolved fact issues that bar decision on the satisfaction of preconditions
to an attorneys’ fees claim, undecided facts and misinterpretations also bar a current decision the
CCP’s eligibility for fees on the rent abatement claim.
IV.

THE USUAL PRACTICE IS TO DETERMINE FEES POST TRIAL

The usual practice in this district, even in bench trials, is to determine attorneys’ fee
claims after trial. The liability and damage issues at trial lay groundwork for attorneys’ fee
determinations but keeping cases manageable requires limiting evidence at trial to the claims and
defenses. Attorneys’ fees are a collateral issue in most cases. And even though the parties have
said the fee claims may be the driver in this case after such a long history of dispute and partial
payments, the fee claims are still collateral to the merits. The need for a separate proceeding is
great in a bench trial where one trier of fact has to absorb and synthesize the evidence.
Presentation of attorneys’ fee liability and amounts in the same setting as substantive claims
would be distracting and could be prejudicial. Determination of attorneys’ fees amounts involves
a multitude of factors not central to CCP’s pleaded claims and Milliken’s defenses. 42 These
concerns recommend not hearing attorneys’ fees issues in the trial of substantive claims.
V.

THE ALTERNATIVE BASES FOR ATTORNEYS’ FEES CLAIMS
REQUIRE A PHASED TRIAL

The parties have enlarged the attorneys’ fee dispute by presenting additional bases for
fees. The increasing complexities of fee issues also recommend a separate proceeding.

42

Dixie State Bank v. Bracken, 764 P.2d 985, 989 (Utah 1988).

18

Milliken’s 81 Motion raises a basis for an award of fees to it. 43 As stated above in Part
III. A., the distinct issues arising under Utah Code Ann. § 78B-5-82 must be considered after
taking evidence on the substantive damage claims.
In its 108 Opposition, CCP suggests additional bases for its claim for attorneys’ fees
claims beyond the Lease Agreement. 44 Because the Lease Agreement has provisions for award
of attorneys’ fees, it is unnecessary to import a provision for attorneys’ fees by an implied
covenant. Importing such a substantive obligation of a core nature would be as unacceptable as
the covenant to sell and deliver a quantity of oil that was sought in MC Oil. 45 But the existing
attorneys’ fees provision could apply to any breach found to fall within the implied covenant of
good faith and fair dealing.
The implied covenant of good faith and fair dealing inheres in most contractual
relationships and requires a party in a contract to perform consistent with the
agreed common purpose and the justified expectations of the other party. This is
recognized where it is clear from the parties' ‘course of dealings' or a settled
custom or usage of trade that the parties undoubtedly would have agreed to the
covenant if they had considered and addressed it. One such duty is an “implied
duty that contracting parties ‘refrain from actions that will intentionally destroy or
injure the other party's right to receive the fruits of the contract.’ 46
The purpose of the implied covenant of good faith and fair dealing is to prevent a party in
technical compliance with an agreement from taking actions that defeat the purposes of
the agreement, even if those actions are not expressly proscribed in the agreement. A
breach of the implied covenant invokes all the written remedy provisions of the
agreement, including this attorneys’ fees clause.

43

81 Motion at 9-12.

44

108 Opposition at 10-16.

MC Oil & Gas, LLC v. UPL Three Rivers Holdings, LLC, 2015 WL 14078433, *1, District of Utah, Case No.
1:15-cv-0038-DN (Memorandum Decision and Order, dated Nov. 25, 2015).
45

46

Cheney v. Hinton Burdick Hall & Spilker, PLLC, 2015 UT App 242, ¶ 17, 366 P.3d 1220, 1225 (cleaned up).

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CCP also suggests that attorneys’ fees may be recovered in a claim for waste. This is
incorrect, as discussed in another order. 47 And CCP suggests that attorneys’ fees may be
recovered as “consequential damages.” 48 This is also incorrect, because there is a general
attorneys’ fees provision in the Lease Agreement and a specific attorneys’ fees provision in
Section 29.
VI.

ISSUES SUGGESTED BY DAMAGES DISCLOSURE

The CCP damages disclosures 49 which were key in the argument on this motion suggest
the need to for CCP to identify the cause of action in the Complaint supporting each claimed
amount, and the Section of the Lease Agreement supporting contract claims. Also, CCP must
disclose the basis or bases for attorneys’ fee liability, if any, for each item of damages.
The presentation of damage calculations with large lump sums and credits also suggests
that a detailed itemization of accrual of claimed expenses and payments will, if possible, help
analysis. For example, Sixth Supplement to Rule 26(a)(1) at 4 deducts the $681,419.86 Milliken
reimbursed CCP for the approximately $1.3 million in damages without explaining which
categories of claimed damages that Milliken was paying off. Trial presentations must enable
analysis of the inception of each claimed default, payments made on that default, and when CCP
placed that matter in the hands of an attorney.

Memorandum Decision and Order Granting in Part and Denying in Part Milliken’s Motion in Limine No. 5 To
Exclude Evidence of CCP’s Alleged Waste Damages, docket no. 110, filed June 3, 2024.
47

48

108 Opposition at 12-13.

49

Exhibits B, C, and D to 81 Motion.

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VII.

ORDER

IT IS HEREBY ORDERED that the 81 Motion 50 is DENIED and the 71 Motion 51 is
GRANTED.
As a matter of trial management:
IT IS FURTHER ORDERED that:
Phased Trial: The first phase of trial starting June 25 will consider only CCP’s claims
for damages and predicate entitlement to attorneys’ fees under the provisions of the Lease
Agreement. No issues arising under Utah Code Ann. § 78B-5-826 shall be presented at the first
phase of trial.
After conclusion of presentation of evidence and argument at the first phase of trial,
preliminary findings will be made on CCP’s claims for damages and predicate entitlement to
attorneys’ fees by fulfilment of any Lease Agreement preconditions. A second phase of the trial,
immediately after the first phase, will consider additional evidence and argument on issues
inherent in attorneys’ fee awards; issues arising under Utah Code Ann. § 78B-5-826; and any
amount of attorneys’ fees to be awarded.
Trial Preparation: Trial preparation materials will be distinct for the first and second
phases. Specifically, the draft Findings of Fact and Conclusions of Law required by the Trial
Order (and any trial brief) will be presented separately for each phase of the trial. And a separate
supplemental exhibit and witness list will be prepared by each party for the second phase of the
trial. Exhibits marked or introduced in the first phase of trial must not be listed in the second
phase exhibit list but may be used in the second phase.

50

Motion In Limine No. 6 to Exclude Plaintiff’s Claim for Attorneys’ Fees, docket no 81, filed May 15, 2024.

51

Motion in Limine Re: Plaintiff’s Attorneys’ Fees and Costs, docket no. 71, filed May 15, 2024.

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Draft Findings of Fact and Conclusions of Law, any trial brief, and the separate
supplemental exhibit and witness list for the second phase of the trial must be filed on or before
June 20, 2024. These may be supplemented at the end of the first phase of trial.
Supplemental Damages Disclosures: On or before June 14, 2024, CCP will file a
Supplemental Damages Disclosure consistent with the observations in this order.
Signed June 4, 2024.
BY THE COURT
________________________________________
David Nuffer
United States District Judge

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